HUD Can Fix $520 Billion In Accounting Errors, But Still Can’t Document Its Spending

1:16 PM 03/07/2017 | Investigative Group

Kathryn Watson | Reporter

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Department of Housing and Urban Development’s (HUD’s) financial books are in such bad shape that HUD’s Inspector General (IG) can’t complete an audit even after HUD officials corrected $520 billion in bookkeeping errors, according to a new IG report.

Officials at HUD fixed $3.4 billion in errors from its 2015 books and $516.4 billion in errors from its 2016 books after the IG in December was unable to issue an opinion on either year’s financial statements and highlighted 11 material weaknesses, seven significant deficiencies and five instances of failure to comply with laws and regulations.

These same problems have been reported for three straight years by the IG.

But it still could not issue an opinion on HUD’s financial statements after the IG gave the department an extension and HUD re-submitted them three months later, with all of those weaknesses unresolved.

The continued problems “were due to an inability to establish a compliant control environment, implement adequate financial accounting systems, retain key financial staff, and identify appropriate accounting principles and policies,” the IG said.

The unresolved issues — the same ones the IG highlighted in its December report — include HUD lawyers’ refusals to sign a management letter listing all HUD litigation, HUD’s improper accounting methods, failure to correctly measure assets and liabilities, discrepancies between general ledger and sub-ledger accounts, and $4.2 billion in loan assets from Ginnie Mae’s financial statements that lack sufficient support for an audit.

The IG, in addition to fixing old recommendations, told HUD to reassess its financial statement review process to catch errors and make sure its financial notes comply with generally accepted accounting principles.

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